The processes involved in planning, estimating, budgeting, financing, funding, managing, and controlling costs so that the project can be completed within the approved budget.
On some projects, especially those of smaller scope cost estimating and cost budgeting are tightly linked and can be viewed as a single process that can be performed by a single person over a relatively short period of time. These are presented here as distinct processes because the tools and techniques for each are different. The ability to influence cost is greatest at the early stages of the project, making early scope definition critical.
Project Cost Management should consider stakeholder requirements for managing costs. Different stakeholders will measure project costs in different ways and at different times. For example, the price of an acquired item may be estimated when the acquisition decision is made or committed, the order is placed, the item is delivered, or the actual cost is incurred or recorded for project accounting purposes.
Project Cost Management is primarily concerned with the cost of the resources needed to complete project activities. Project Cost Management should also consider the effect of project decisions on the subsequent recurring cost of using, maintaining, and supporting the product, service, or result of the project. For example, limiting the number of design reviews can reduce the cost of the project but could increase the resulting product’s operating costs.
In many organizations, predicting and analyzing the prospective financial performance of the project’s product is performed outside of the project. In others, such as a capital facilities project, Project Cost Management can include this work. When such predictions and analyses are included, Project Cost Management may address additional processes, and numerous general financial management techniques such as return on investment discounted cash flow and investment payback analysis.
The cost management planning effort occurs early in project planning. It sets the framework for each of the cost management procedures so that performance of the procedures will be efficient and coordinated.